Mexico Economic Activity May 2016


Economic activity slows in May

Economic activity, measured by INEGI’s proxy monthly GDP (EGAE), decelerated from a 3.0% year-on-year expansion in April to a 2.2% increase in May, which was in line with market expectations. The expansion in May was supported by a 3.5% annual increase in services and by a 0.4% rise in industry. That said, both results marked a deceleration over the previous month. Conversely, the agricultural sector contracted markedly in May.

Sequential data, however, painted a more positive picture for economic activity in May. A month-on-month comparison showed that economic activity rebounded and expanded 1.0% in seasonally-adjusted terms. The result recovered part of the ground lost in April, when activity contracted 1.2%.

All in all, May’s result seems to confirm that April’s bad performance was temporary in nature and that the trend in economic activity remains broadly stable. Annual average growth in economic activity remained stable at April’s 2.5% in May.

The Central Bank (Banxico) expects the economy to grow between 2.0% and 3.0% this year. For 2017, the Bank expects GDP to grow between 2.5% and 3.3%. According to the latest survey of analysts for the LatinFocus Consensus Forecast, panelists see the economy increasing 2.4% in 2016, which is unchanged from last month’s forecast. For 2017, the panel expects growth to pick up to 2.7%.

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Mexico Economic Activity Chart

Mexico Economic Activity May 2016

Note: Year-on-year changes and annual average growth rate of monthly economic activity in %.
Source: Mexico National Statistics Institute (INEGI)

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